People Express venture drains federal grant

Peninsula officials are still trying to woo air service to New York and Boston, but the federal grant used to launch People Express' short-lived effort is used up and no longer available.

Airport officials and People Express haven't communicated in weeks, said Ken Spirito, executive director of Newport News/Williamsburg International Airport.

"They're out of here," he said. "They haven't been in touch and we haven't called them."

People Express executives did not respond to repeated messages.

Spirito said he believes the airport can convince another airline to come and tap a strong market for low-fare flights even without being able to put a federal subsidy on the table.

People Express started flights last July and suspended them less than three months later.

It did so using planes from a Nevada company with a $30 million negative net worth at the time the airport signed an agreement promising that company $950,000 in federal subsidies backed up by an additional $650,000 from Peninsula cities and counties.

Now, said Spirito, "The (federal) grant is in the process of being closed out and will not be available to support another carrier."

The airport booted People Express out of the main terminal last November because the company had not paid $86,000 in passenger facility charges. Those are the $4.50-per-passenger fees collected by air carriers to help fund airport improvements. The airlines can keep 11 cents for themselves and are required to give the remaining $4.39 to the airport.

Spirito said that money would have to be paid before People Express could resume operations at the airport. So far, it hasn't been.

Last month, the airport evicted People Express from its rent-free offices in the old terminal because the company hadn't paid about $18,000 for utilities, trash collection and other fees.

Spirito said he did not expect to see People Express return to the airport and said he was focusing on luring other airlines.

"I'm very confident we can sell them on the fact that there's a strong market here for low-fare service," Spirito said, pointing to the strong traffic AirTran saw before it stopped service in 2012, after it was acquired by Southwest Airlines.

Because of the flights the Nevada company — Vision Airlines — did make before the service was suspended, the Department of Transportation has released $739,000 out of the grant to the airport commission. An additional $650,000 Peninsula cities and counties set aside to subsidize the flights has not been touched.

The money Vision received for the three months it flew People Express' service nudged it into the black that quarter for the first time in three and a half years. It posted a profit of $314,000 that quarter, compared to quarterly losses of $3 million each for the first two quarters of the year, its financial filings with the U.S. Department of Transportation show.

Two weeks ago, Vision reached an out-of-court settlement with a firm that had financed an engine on one of its aircraft. That company had sought more than $2 million in unpaid fees and maintenance reserves, as well as for repairs it eventually had to make to the engine. Vision agreed to pay an unspecified sum over time, court records show.